Customer Onboarding to the Rescue

by Mercator Advisory Group 0

A number of banks have instituted programs to improve their account onboarding performance over the past five years. The principal motivation for these programs has been research which shows that customers are much more open to expanding their relationship during the first year. After the first year, the euphoria of the new relationship wears off and cross-selling becomes much more difficult. Recent changes of regulations are putting new pressures on bank profitability and some banks are responding by increasing fees and minimum balances.

A more positive approach to offsetting fee income can be achieved through better onboarding of new customers. Specifically, effective onboarding programs help to cultivate primary banking relationships and stable, low-cost core deposits by aiding and encouraging new customers to adopt services, such as direct deposit and online bill payment, that ensure checking accounts are regularly funded, actively transacting and thus maintaining higher average balances. These services also help to make relationships stickier, which in turn means fewer accounts attrite and reduces pressure on account acquisition to replace customer and balance churn.

To improve onboarding performance, retail bankers should start by examining the five key components of a successful new customer onboarding program: program objectives; process design; communications content; execution; and program management.

For additional information on the five key components, read the full article in Banking Strategies:

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